A coalition of the world’s richest countries appears to have accepted that there is a need to address loss and damage from extreme weather events in a UN climate deal, set to be agreed in December.

The US, EU, Switzerland and Australia are working on separate proposals on how the contentious issue could be included in the Paris pact, and are expected to deliver their vision at UN climate talks in Bonn on Friday.

Two observers monitoring the negotiations have told RTCC this text will recognise the importance of helping poor countries cope with climate-influenced events.

One European envoy said work on the proposal was underway but offered no details on what it contained.

Another official with knowledge of discussions emphasised the proposals would not cover compensation or liability linked to climate impacts.

Developed countries would seek to emphasise their support for the existing UN loss and damage mechanism created in 2013 along with other means of averting disasters such as early warning systems, they added.

Harjeet Singh from the NGO ActionAid welcomed the news as evidence of a shift in thinking among rich nations: “They are not ignoring the elephant in the room or hiding it under the carpet. They are engaging.”

Previously, US and EU officials have insisted that climate compensation could not be part of any legally binding UN package in Paris, a position that seems unlikely to change.

Wealthy countries fear they could be on the receiving end of ever-increasing payouts if climate impacts intensify, and only agreed to set up a UN loss and damage body in 2013 under duress.

But opposition in Washington and Brussels to its inclusion under a global pact appears to have waned in the face of fierce lobbying from NGOs and the vast majority of developing countries, who have branded it a deal-breaker.

The mooted document will likely build on a G7 pledge in June to ensure 400 million people in vulnerable regions would have access to climate insurance by 2020, up from an estimated 50 million in 2015.

The movement from rich nations came as the G77+China group of developing countries released their own proposal for the inclusion of climate compensation in the Paris deal – a longstanding demand of governments vulnerable to storms and sea level rise.

“An international mechanism to address loss and damage is hereby defined under this agreement and shallbe bound by the principles and provisions of the Convention,” reads its opening line, which the G77 wants inserted in the legally binding part of a Paris deal.

Angolan diplomat Giza Gaspar Martins, head of the Least Developed Countries group at the talks, said the decision on Thursday by G77 countries to agree a common position was a “significant” moment for the negotiations.

“It used to be it was considered only of importance to small group of countries – in particular small island developing states,” he said.

“But there is now a recognition that loss and damage is a more of a development-centric issue… in that sense, we are very happy to have the numbers of all G77 and China to advocate and negotiate as one.”

Martins said he understood concerns from rich countries that they could be liable for unlimited payouts, but insisted that understanding of how loss and damage could be addressed was still evolving.

According to Munich Re insurance group, losses linked to the weather worldwide have risen from US$50 billion in the early 1980s to around $200 billion a year.